Tech firm NetEase pulls $1bn Cloud Village IPO after Beijing’s attack on gaming
Chinese technology firm NetEase has put a pin in its $1bn Hong Kong listing for its music streaming service Cloud Village due to recent volatility in the tech market, according to reports.
The initial public offering (IPO) had already been approved by the Hong Kong Stock Exchange’s listing committee, according to filings lodged with the exchange.
Preliminary meetings were also held with potential investors last week, Reuters first reported, citing two people with direct knowledge of the matter.
City A.M. has contacted NetEase for comment.
The deal was set to launch this week but was paused on Monday, as China’s recent scrutiny of tech heavyweights and gaming has sparked erratic market conditions.
‘Spiritual opium’
Last week, NetEase’s Hong Kong-listed shares lost nearly 14 per cent after Chinese state media labelled video games “spiritual opium”.
NetEase was not the only tech giant hit by the remarks, Tencent also saw its shares sink by around 10 per cent.
An article posted by Economic Information Daily warned that a “new type of electronic drug” was “advancing by leaps and bounds” – which prompted fears that the gaming sector would be next in line for a regulatory crackdown by Chinese authorities.
NetEase confirmed it would sell off Cloud Village while retaining 62.4 per cent ownership of the streaming business in May.
The sources added that Alibaba-backed Cloud Village had aimed to raise up to $1bn in the IPO.
It comes as TikTok’s owner ByteDance mulls a Hong Kong IPO – with the condition it can first fly by hawkish regulators in the region.
The news and entertainment group is eyeing the fourth quarter of this year or early 2022, the Financial Times reported, citing sources familiar with the matter.
However, a spokesperson for ByteDance shot down the claims, telling City A.M.: “This report is not correct”, with no further explanation.